Customize Your ERP or Adapt To It? What's Your Strategy?

So it's time for your enterprise to do an ERP refresh or replacement. As you approach it, is it better to customize or go with what the vendors give you? There are pitfalls to both. Here are some ideas to help you decide.

By Todd R. Weiss
Thu, July 14, 2011

CIO — If your enterprise has customized your mission-critical ERP systems over the years, your future upgrades will likely be more troublesome and terrifying because the changes can conflict with the patches. On the other hand, if you are running out-of-the-box ERP with little customization, maybe you're not getting all the important features your business needs.

So what's a CIO to do? And how do you figure out what to do next if upgrades or replacement are looming in your future?

These are the kinds of important decisions being faced regularly by enterprises of all sizes as they carefully examine the future of ERP implementations inside their businesses, says Rebecca Wettemann, an ERP analyst with Nucleus Research Inc.

"We do see more and more CIOs going the 'less customization' route" nowadays, she says. "In the last round of ERP deployments that people did, maybe 10 years ago, they did a lot of customizations. But I would say that the majority today are going 90 percent out of the box — with very vanilla installations. It gives you a more predictable and cheaper deployment and then obviously, it makes upgrades less disruptive and less costly."

Part of the reason for this recent trend is that ERP vendors are now recognizing that if they build applications that include verticalization, they will be easier for more companies to adopt with fewer problems and far less customization, she says.

"Verticalized applications" are built with specific vertical industries in mind, so they are essentially designed to fit different kinds of businesses out of the box. To help the applications better conform to your specific company, they include role-based views and components that users can configure with check boxes and other methods so they more closely suit your business and process needs, without requiring code writing and deep code customization. That means that verticalized applications can later be upgraded more easily minus the associated problems and sometimes major complications that come with trying to upgrade customized code.

One vendor that does this well is NetSuite, a cloud ERP company that allows lots of configurability, she says.

Even some of the big players in the ERP marketplace tend to discourage the full customization route today.

"If you talk to Oracle (ORCL), they will tell you don't customize," Wettemann says. "They'll tell you to use a verticalized application and limit yourself to configuring as opposed to customizing code."

It's becoming a more common mantra in the ERP industry, according to Wettemann.

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